Mortgage rates briefly plummeted close to 6.0% Friday afternoon according to Mortgage News Daily (MND) after President Trump announced a possible purchase of $200 billion in mortgage-backed bonds, assets that directly affect mortgage rates.
At time of writing, MND's average 30-year fixed rate was 6.06%, a 3-year low.
"Because I chose not to sell Fannie Mae and Freddie Mac in my First Term … it is now worth many times that amount — AN ABSOLUTE FORTUNE — and has $200 BILLION DOLLARS IN CASH. Because of this, I am instructing my Representatives to BUY $200 BILLION DOLLARS IN MORTGAGE BONDS," President Donald J. Trump wrote on social media yesterday.
"This will drive Mortgage Rates DOWN, monthly payments DOWN, and make the cost of owning a home more affordable," the president's post continued.
Who Will Buy the Mortgage Bonds?
The social media post was a little light on details, but most commentators are connecting the dots and assuming that Fannie Mae and Freddie Mac will be making the purchases.
That makes sense. Fannie and Freddie are government-sponsored enterprises (GSEs). They add stability and liquidity to the market by purchasing mortgages from lenders, bundling those loans into mortgage-backed securities (MBSs), and selling the securitized instruments to investors.
Both organizations are regulated by the Federal Housing Finance Agency (FHFA), and as GSEs, the government essentially guarantees their debts. FHFA Director Bill Pulte posted on X soon after Trump's post, "We are on it, Mr. President!"
Meanwhile, The Wall Street Journal has been doing some math: "Today, Fannie and Freddie are allowed to hold up to $225 billion of mortgage-backed securities [aka mortgage bonds], each. But they only hold a combined $247 billion, as of November, meaning they have roughly $200 billion in room to grow."
How Much Might Mortgage Rates Fall?
Nobody would argue that $200 billion is anything but a huge sum. But it's not an enormous amount in the MBS market.
The Securities Industry and Financial Markets Association's data say that $1,893.6 billion in new MBSs were issued in 2025, and those securities were traded at a rate of $350 billion every business day over that year.
So, $200 billion is a less significant sum in that context than in most others. But how much difference might it make to mortgage rates?
The WSJ found someone willing to take a guess. David Dworkin, chief executive of the National Housing Conference, told the Journal he was expecting mortgage rates to drop 25 basis points (0.25% or a quarter of a percentage point) or maybe more.
The Potential Importance of Even a Modest Fall
On Thursday, Freddie Mac announced, "The 30-year fixed-rate mortgage averaged 6.16% as of January 8, 2026." So, knocking 25 basis points off that would see that rate drop to 5.91%, and the last time it was that low was in early August 2022, according to Freddie.
Having a rate that starts with a 5 could burst through a big psychological barrier for many who are currently holding off on moving, refinancing or buying their first home.
However, all this assumes that mortgage rates stay in their current range before the purchases of MBSs get underway. We're due crucial employment and inflation data today and next week that might move those rates, perhaps significantly, either up or down. And those reports could hasten or destroy the breaking of the 6% barrier.
Risks of the GSEs Buying Mortgage Bonds
Some fear that lower mortgage rates aren't enough to improve affordability. "Some agents have said that if rates dropped substantially and the supply of homes remained the same, home prices would likely rise," reported the WSJ. It added that's especially the case in markets where properties for sale are failing to meet demand.
And, with new and long-time homeowners grappling with rocketing property taxes and insurance premiums, many are looking at wider costs rather than focusing exclusively on mortgage rates.
Finally, there are concerns about what would happen if there were a sudden, severe recession. That could see defaults and foreclosures piling up, which would put Fannie Mae and Freddie Mac's finances under great pressure. Few want a repeat of the 2008 housing crisis when hundreds of billions in taxpayers' dollars had to be put on the line to bail out the two GSEs.
